Business

House prices: Continued decline, says Land Registry

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Image caption Many first-time buyers have struggled to secure a mortgage

House prices continued to slide in October in England and Wales, falling slightly compared with the previous month, the Land Registry has said.

Prices fell by 0.8% compared with the previous month, leaving the average property valued at £165,505, it said.

Only London and the East of England registered property price rises compared with September.

The biggest fall was in Yorkshire and the Humber, where a 1.8% drop pushed down the average price to £126,292.

This was the second month in a row that month-on-month prices had dipped into negative territory on average across England and Wales, the Land Registry's figures show.

The rate of year-on-year price changes has now slowed for five consecutive months, with the annual rate of house price inflation at 3.4% in October.

Trend?

Recent house price surveys have shown the effect of a lack of demand among buyers unable to secure a mortgage, as well as more properties coming onto the market.

This has led to a stagnation, or slight dip, in prices in recent months.

Paul Diggle, property economist at Capital Economics, said: "The second consecutive monthly drop in the Land Registry measure of house prices is further evidence that the devaluation is becoming more embedded.

"The fact that house prices are still overvalued across a range of measures, combined with the poor outlook for the underlying economic drivers of the housing market, means that house prices are likely to fall considerably further next year."

Earlier this week, the Nationwide Building Society suggested that it was expecting house prices to continue to fall in the near future.

Mortgage change

Meanwhile, one major mortgage lender announced plans to charge new customers a higher interest rate when their mortgage deal comes to an end.

The Halifax is introducing a new standard variable rate, known as the homeowner variable rate (HVR), from 4 January 2011. Anyone taking out a mortgage with the group from that date will revert to the new rate when their initial deal ends.

The HVR will charge interest of 3.99%, compared with interest of 3.5% currently charged on the group's standard variable rate (SVR).

This follows moves by Lloyds TSB, Cheltenham & Gloucester and Nationwide to replace their SVRs of 2.5% with ones charging 3.99% for new customers.

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